Jeffrey Skilling, for CEO of Enron, was released from prison yesterday. Mr. Skilling and others became infamous for perpetrating a fraud of major proportions on Enron stockholders and others in what has became known as the Enron Scandal.
It’s hard for a corporate CEO to end up in jail. It happens rarely. They’re judged by a different standard than run-of-the mill blue-collar offenders. Rich white-collar transgressors usually get a pass. It’s just the way the world is stacked in favor of people with wealth and status. It’s always been that way. But the implicit immunity for CEOs and other corporate types has eroded in my lifetime. A little. And it many be eroding further. Which is something to keep in mind. If you’re a corporate type.
It’s easier for corporate types to be sent to prison for antitrust and securities crimes than it used to be. And for environmental crimes, too. Although it doesn’t happen often. We simply don’t fund the enforcement agencies well enough for that. But the winds may be shifting in this era of supposed populism.
I recently learned that my successor at the chemical company I used to head has been criminally charged in connection with the release of toxic chemicals in the aftermath of Hurricane Harvey in the Houston area last year. My first reaction was, this could have been me.
Of course, I don’t know if it could have been. I’ve been away from that company for 10 years. I don’t know the facts surrounding this case other than what I’ve read in the newspapers, which isn’t much. Specifically, I don’t know the evidence presented to the grand jury. But I have a pretty guess what happened.
First of all, the CEO probably isn’t really in charge of the plant at which the uncontrolled combustion of chemicals occurred. The plant manager is. But even he doesn’t have unlimited authority. He answers to a business leader, probably situated outside of Philadelphia. Or Paris (this company is a subsidiary of a French company). And corporate safety and manufacturing directors are involved, too. They’re probably located outside of Philly, too. So, actually, the CEO is pretty removed from the day-to-day operations at the site. Yet he was charged. With a crime. Because there was a release. Caused by the failure to anticipate what could happen. If a flood of unprecedented proportions hit the area.
At first blush, it seems like a stretch to me. But, again, I don’t know the facts. I can’t be sure there wasn’t gross negligence or recklessness involved here. It’s just that I’d be surprised that, if there was, it rose to the level consistent with criminal culpability. At least as it used to be viewed. But that’s the point. Perhaps levels of tolerance are changing.
I get the argument that someone has to be held accountable. And, as President Truman’s desk placard read, “The Buck Stops Here.” At the top. On the shoulders of the CEO. Anything short of that tends not to get the attention of the organization. It’s only when the leaders are at risk that things really change. That funds are provided for safety and environmental projects. That a culture of compliance is embraced. That risks are fully factored into the decision making processes.
I suspect that my successor eventually will be exonerated. But if he and his company isn’t, you will see changes in the way chemical and other risky manufacturing are operated. There will be less risk taking. And more consideration of the health and welfare of the workers and neighboring communities.
Presently, the risk to some of those communities is greater than most people realize. The “kill zone” around some chemical plants is considerable. Many precautions are taken to protect against major releases of toxic or hazardous, but there are always trade-offs. All risks can’t be eliminated. At least without undermining the economics of the plant. Or so it’s thought. And that’s the issue: what’s financially feasible? What risks are acceptable?
Presently, the neighbors essentially have no say in the matter. Sure, regulators supposedly look out for their interests. But we know how that works. Bureaucrats are accountable — insofar is there is any accountability — to policy makers, otherwise known as politicians. And politicians are beholden to those who contribute to their campaigns, that is, to those who fund the system of legalized bribery that is part and parcel of our form of government. And we know who makes all those campaign contributions (direct and indirect ones): corporations, CEOs and other executives, and wealthy investors.
I know and like my successor, who unfortunately is now in the position of fighting for his freedom as the district attorney in Houston tries to push the boundaries of what constitutes criminal corporate liability. Frankly, I don’t think it’s a coincidence that we’re seeing this battle fought out in Houston courts. It was Houston, after all, where Enron had its headquarters and perpetrated its massive fraud.
Perhaps Houston has had its fill. Of innocent victims. And has decided something has to change. In the way companies are run. And in the way their decisions are allowed to impact others.